Bitcoin prices fell to less than $40.00 today, consistently fluctuating south of that level and reaching their lowest in roughly two weeks.
The world’s most prominent digital currency dropped below $40,000 around 9:30 am EST, before declining to as little as $39,477.09 around 11 am EST, CoinDesk figures show.
This latest downward movement took place after the cryptocurrency fell sharply yesterday, suffering its largest intraday loss since January 21.
After depreciating to its recent low of $39,477.09, bitcoin bounced back, surpassing $40,400 in less than an hour, but once again moved lower, repeatedly reaching points below $40,000.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Global Political Uncertainty
When describing bitcoin’s recent price weakness, several experts highlighted how politically unaffected the markets.
Ben McMillan, CIO at IDX Digital Assets, spoke to these developments, describing yesterday’s downward price movement as “largely a technical sell-off on the back of continued uncertainty about Ukraine as well as the President’s executive order on crypto regulation.”
Ben Armstrong, founder of BitBoy Crypto, also weighed in, stating that “the instability around the Ukrainian-Russian border has led to a drop in the Bitcoin price.”
“This could be a sign of fundamental stress on the price of Bitcoin as opposed to a purely technical move,” he added.
Key Technical Levels
In addition to shedding light on what caused bitcoin’s recent price movements, several experts provided technical analysis, outlining key levels of support and resistance that bitcoin might encounter.
Nick Mancini, research analyst at crypto sentiment data provider Trade The Chain, spoke to this matter.
“Bitcoin technical analysis shows key liquidity levels at $38,700 and $37,000, meaning there is a lot of buy interest at those levels. If Bitcoin is unable to hold $40,000, it is likely to test those levels into the weekend.”
Brett Sifling, an investment advisor for Gerber Kawasaki Wealth & Investment Management, also contributed input.
“I think there are two major levels to watch out for on the downside. The first level is the low from this current correction, which bottomed on January 24th just under $33,000,” he stated.
“Another major level would be around $30,000, which has served as a major support level since early 2021. A break of this ~$30,000 support level could suggest another major downturn.”
Sifling also spoke to resistance levels, noting that “For bulls to regain control, we’d like to see a base build at or above the $50,000 level before making a move towards $60,000 and then all time highs.”
McMillan commented on some potential resistance, stating that “Bitcoin is trading between the key levels of $40k and $45k and a breakout on either side that would likely be followed by a sustained move in that direction.”
William Noble, the chief technical analyst of research platform Token Metrics, spoke to the head and shoulders pattern, a kind of chart formation that frequently points to a trend reversal.
“There is a very clear head and shoulders top on the bitcoin daily chart. The pattern was confirmed by the failed rally to 45k and subsequent decline,” he stated.
“The next big levels are 36,700 and 34,000. 36,700 was the takeoff point of the most recent up move that stopped near 45k.”
Noble also mentioned further price levels that could provide key support.
“34k is an interesting point as well. Back in July 2021, 34k was the high the week of the final big down week of that correction,” he stated.
“BTC may bounce in a big way off that level. Using Fibonacci extension work, it is possible bitcoin falls to 28k, especially if the stock market bubble pops.”
Bitcoin’s Short-Term Outlook
Tim Enneking, managing director of Digital Capital Management, spoke to the key variables affecting bitcoin’s price, as well as what they could mean for the digital currency’s outlook in the near future.
“While $40k is an important psychologically level, there is really nothing magic about it,” he noted.
“Even though the news has been generally good in the crypto space recently, the truly annoying high recent correlation with the SPX, coupled with geopolitical concerns focused around the pending (and seemingly inevitable) Russian invasion of Ukraine, is pressure on BTC for really no fundamental reason,” said Enneking.
“That pressure hurts three primary theses of BTC: (1) safe haven, (2) non-correlated, and (3) inflation hedge.”
“The crypto optimist in me says that, once the invasion of Ukraine takes place, the price will drop (with fiat equity markets), but then recover more quickly and much harder than fiat markets. That remains to be seen, however.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.